South-east is UK's dominant property region

Monday, 16 June 2008 12:00 AM

The south-east is the dominant region in the UK when it comes to property price growth, according to Knight Frank.

Research from the top-end estate agent finds prices grew in the region by seven per cent during 2007, ahead of both central London and the UK as a whole.

The capital achieved growth of just 4 per cent during the course of the last year, while the UK as a whole saw average prices rise five per cent.

However, the south-east should not be viewed as a single, homogenous region, argues Knight Frank, with some of the strongest performing local authorities varying considerably in terms of location and character.

The traditionally affluent home county locations such as south Bucks and the Wealden area in east Sussex experienced growth in excess of 19 per cent but similar levels of growth were achieved in coastal locations such as Adur (Shoreham-by-Sea) and Hastings - both of which have been the focus of significant regeneration.

Six local authorities in the south-east saw an increase in sales volumes in 2007; Wycombe, Bracknell Forest, Slough, Ashford, Crawley and Thanet.

All are areas either undergoing major regeneration, earmarked for significant new supply, or due to benefit from improved transport links.

Prices in the region may also be supported by a shortage of new property coming onto the market.

The government's household projections for the south-east have recently been revised upwards from 34,400 to 35,800 per annum, yet against this level of demand the region is currently only delivering around 27,500 new homes each year.

"This scenario, combined with the absence of both sharply rising interest rates and little evidence of a rapidly deteriorating employment market, has meant there are not a large number of forced sellers," said Liam Bailey, Knight Frank head of residential research.

"Consequently, we envisage that the south-east will experience limited price falls in 2008, on a par with Greater London and still outperforming the wider UK market."

However, there are some signs of a wider slowdown, in line with the UK as a whole.

Research from the Land Registry illustrates transaction levels falling by 17 per cent over the course of 2007. Knight Frank expects this level to fall further during 2008, as the liquidity crisis makes it increasingly difficult for buyers to secure the necessary finance.

Chris O'Toole

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